US Healthcare System for Pharma Reps

01The Four Parts of Medicare

Part A covers inpatient hospital, skilled nursing facility, and hospice care. Part B covers outpatient physician visits, preventive care, and durable medical equipment. Part C (Medicare Advantage) is a private-plan alternative that bundles A and B and often adds extras like dental/vision and drug coverage. Part D covers outpatient prescription drugs through private plans.

02Medicare vs. Medicaid

Medicare is a federal program mainly based on age (65+) or disability, funded through payroll taxes. Medicaid is a joint federal-state program based primarily on income, with eligibility and benefits that vary by state. A patient enrolled in both is called 'dual eligible.'

03Commercial vs. Government Payers

Commercial insurance (employer-sponsored or individually purchased) is privately funded and not subject to the same federal anti-kickback restrictions as Medicare and Medicaid, which are government health care programs funded by taxpayers.

04What a PBM Does

A Pharmacy Benefit Manager (PBM) is a third party that administers the prescription drug benefit on behalf of an insurer or employer: it builds the formulary, negotiates manufacturer rebates, sets pharmacy networks, and processes claims.

05Formulary Tiers

Formularies rank covered drugs into cost-sharing tiers — typically generics (lowest cost-share), preferred brand, non-preferred brand, and specialty (highest cost-share). A higher tier means the patient pays more out-of-pocket, but the drug is still covered.

06Prior Authorization vs. Step Therapy

Prior authorization requires the plan's advance approval before it will cover a drug, based on medical necessity criteria. Step therapy is a protocol-driven type of prior authorization requiring the patient to first try (and typically fail or not tolerate) a specified alternative before the prescribed drug is covered.